1 Excludes income reinvested.2 The capital only net asset value (NAV) is calculated without income for the year to 28 February 2019 and 28 February 2018 respectively, net of dividends paid in respect of the relevant financial years. More detail is given in the Glossary. contained within the annual report.3 The basis of calculation for the fair value of the debt is disclosed in note 13 of the financial statements and in the Glossary contained within the annual report.4 Ongoing charges ratio calculated as a percentage of average shareholders’ funds and using operating expenses, excluding performance fees, finance costs, transaction costs and taxation, in accordance with AIC guidelines.5 With effect from 1 March 2018, a performance fee is no longer charged. For the year ended 28 February 2018, a performance fee was charged. Please see note 4 for further details of the change.

Sources: BlackRock and Datastream.

CHAIRMAN’S STATEMENT

Your Company has a remarkable record. For sixteen consecutive years it has outperformed its benchmark and increased its dividend. Over that period, the NAV has increased nearly twelve-fold whereas the benchmark has increased less than four-fold (all calculations with income reinvested). The compound annual increase in dividends paid over the past ten years has been 20% per annum.

PERFORMANCE
It has been a challenging year and it is disappointing that the Company’s Net Asset Value per share fell by 6.6%1. However, the Company outperformed its benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, which decreased by 8.2%1. During the financial year, your Company’s share price increased by 0.4%1 to 1,330.00p per share.

The year was characterised by an increase in volatility with significant declines in global markets at the start of the year offset by a rebound in April 2018. This was followed by further significant market falls in October and November 2018, driven by geopolitical concerns over the impact of US interest rate rises, uncertainty over trade disputes and increasing fears of a US recession. Higher quality growth stocks were the most severely affected which impacted the portfolio’s relative performance. In the UK, concerns over Brexit and a weaker currency resulted in markets lagging behind other global indices, with UK small and mid-capitalisation companies underperforming their larger peers. The FTSE AIM All-Share Index fell by 12.4%1 compared with the FTSE 250 Index which fell by 2.6%1 and the FTSE 100 Index which fell by 2.2%1.

The relative outperformance of the Company’s NAV over the year was largely attributable to good stock selection. The best individual stock performances came from companies with exposure to the oil price as well as those engaged in financial services, manufacturing and data analytics. The largest detractors from relative performance came mainly from companies in the retail sector which struggled in increasingly tough trading conditions. More details of the contributors to performance can be found in the Investment Manager’s Report.

Since the financial year end the Company's NAV as at 30 April 2019 has increased by 9.3%1, against an increase in the benchmark of 4.0%1, and the share price has risen by 9.6%1.

The tables below demonstrate your Company’s consistent outperformance over its benchmark during the last sixteen years.

16 Consecutive Years of Outperformance

Feb 04

5.93

Feb 05

12.60

Feb 06

8.92

Feb 07

11.42

Feb 08

6.49

Feb 09

1.91

Feb 10

4.88

Feb 11

34.25

Feb 12

2.11

Feb 13

3.05

Feb 14

11.44

Feb 15

4.21

Feb 16

7.03

Feb 17

4.60

Feb 18

11.60

Feb 19

0.90

BlackRock assumed management in December 2004.

Source: BlackRock.

Outperformance percentages above are based on NAV (debt at par) performance compared to benchmark performance both with income reinvested. Prior to 31 August 2007 the Company’s benchmark was the FTSE SmallCap Index (excluding Investment Companies); after this date the Company adopted the Numis Smaller Companies plus AIM (excluding Investment Companies) Index as its benchmark.

1 Percentages in sterling without income reinvested.

Performance to 28 February 2019

1 Year
change
%

3 Years
change
%

5 Years
change
%

10 Years
change
%

16 Years
change
%

NAV per share1,2

-6.6

41.9

42.9

519.1

897.9

Benchmark1

-8.2

19.7

4.6

196.3

191.0

Share price1

0.4

54.1

46.5

651.4

1,111.8

NAV per share2 (with income reinvested)

-4.8

49.4

55.0

624.2

1,189.8

Benchmark (with income reinvested)

-5.7

29.4

19.5

282.2

336.9

Share price (with income reinvested)

2.4

63.5

60.6

800.4

1,542.7

1 Percentages in sterling terms without income reinvested.2 Debt at par.

In addition to capital returns, the Company has also provided very impressive growth in income.

The chart on page 5 of the annual report illustrates the scope to build up, over the long term, an attractive annual income from an investment in the Company. Even if the initial dividend yield at the point of purchase has been unremarkable, the strong underlying growth in dividends over the years can result in a competitive yield on cost when compared with equity income funds.

Specifically, this chart shows that £1,000 invested in the Company on 31 March 2006 would have increased in value by 354% in NAV terms to 28 February 2019, whereas £1,000 invested in the median open-ended UK Income Fund would have increased by just 105%. The chart also demonstrates that while the yield on the Company's shares was much lower at the begining of the period, over time the Company’s dividend has grown at a much faster rate than open ended competitors in that sector. As a result, the yield on the purchase cost on the investment in the Company would now be more than that on the median UK Income Fund.

RETURNS AND DIVIDENDS
The Company’s revenue return per share for the year ended 28 February 2019 increased by 14.9% to 33.67 pence per share compared with 29.30 pence per share for the previous year.

Regular dividends from portfolio companies rose by 11.1%, while special dividends received were 50.7% higher than in the previous year.

In October 2018 the Board declared an interim dividend of 12.00p per share (2018: 10.00p per share). The Directors are pleased to recommend the payment of a final dividend of 19.20p per share (2018: 16.00p per share), making a total for the year of 31.20p, an increase of 20% over the total dividends of 26.00p paid in the previous year. Subject to shareholder approval, the final dividend will be paid on 12 June 2019 to shareholders on the register on 17 May 2019; the ex-dividend date is 16 May 2019.

The compound annual increase in dividends paid over the past ten years has been 20.0% per annum.

Your Company has now increased its dividends every year for each of the last sixteen years.

GEARING AND SOURCES OF FINANCE
The Company has a range of borrowings and facilities in place to provide balance between longer term and short term maturities and between fixed and floating rates of interest. Fixed rate funding consists of the Company’s existing £15 million debenture, which matures in 2022, and £25 million senior unsecured fixed rate private placement notes issued in May 2017 at a coupon of 2.74% with a 20 year bullet maturity.

Shorter term variable rate funding consists of a £35 million three-year revolving loan facility with Scotiabank (Ireland) Limited and an uncommitted overdraft facility of £10 million.

It is the Board’s intention that gearing will not exceed 15% of the net assets of the Company at the time of the drawdown of the relevant borrowings. Under normal operating conditions it is envisaged that gearing will be within a range of 0%-15% of net assets. Gearing levels and sources of funding are reviewed regularly and the Board continues to believe that moderate gearing is in the long term interests of shareholders. At the year end, the Company’s gearing was 4.9% of net assets (2018: 9.8%).

DISCOUNT
During the year the share price traded at an average discount of 7.9% to NAV. The discount ranged between 1.1% and 12.3% and ended the year at 5.0% (all measured against NAV with debt at fair value). The discount has since narrowed to 4.8% as at 30 April 2019.

ANNUAL GENERAL MEETING (AGM)
The AGM of the Company will be held at the offices of BlackRock at 12 Throgmorton Avenue, London EC2N 2DL on Tuesday, 4 June 2019 at 2.00 p.m. Mike Prentis and Roland Arnold, the Portfolio Managers, will be making a presentation to shareholders on the Company’s performance and the outlook for equity markets. The Directors and representatives of the Manager look forward to meeting shareholders informally after the meeting and I hope that as many shareholders as possible will choose to attend.

CHANGE IN CHAIRMAN AND BOARD COMPOSITION
As previously announced, I will not be seeking re-election at the Company’s next AGM and will be stepping down from the Board with effect from the close of the AGM on 4 June 2019.

It has been a privilege to chair the Company for the past 7 years. I would like to thank all shareholders for their support; and to thank my Board colleagues and the team at BlackRock for helping make my tenure as Chairman as rewarding and enjoyable as it undoubtedly has been.

Having carefully considered the composition of the Board and the need to ensure that a suitable balance of skills, knowledge, experience, independence and diversity was maintained, the Board recently undertook a search and selection process to identify a new Director. As a result, I am delighted to welcome Mr Ronald Gould to the Board. Mr Gould joined with effect from 1 April 2019 and will be appointed Chairman following the AGM. He also serves as a member of the Company’s Audit1, Nomination and Management Engagement Committees. Ron has a wealth of experience in the financial sector and is currently a non-executive director of ONE Re Ltd and Chairman of Think Alliance Asia and Compliance Science Limited. He was previously Managing Director and head of the Promontory Financial Group in China, CEO of Chi-X Asia Pacific, Senior Adviser to the UK Financial Services Authority, CEO of investment bank ABG Sundal Collier and Vice Chairman of Barclays Bank's asset management activities.

Further details of Mr Gould’s background can be found in the Directors’ biographies section contained within the Company’s 2019 Annual Report. Information on the recruitment and selection process undertaken and details of the Board’s policy on the re-election of directors, director tenure and succession planning can be found in the Directors’ Report contained within the Company’s 2019 Annual Report.

PORTFOLIO MANAGER SUCCESSION
After a long and successful 32 year career as an investment manager, of which the last 14 years was with BlackRock, Mike Prentis has announced his decision to retire from the industry. The Board would like to take the opportunity to thank Mike for the major contribution that he has made to the success of the Company and congratulate him on an exceptional investment record, notably the 16 consecutive financial years of outperformance achieved in managing the BlackRock Smaller Companies Trust plc. We wish Mike all the best for the future.

Roland Arnold, who has worked closely with Mike for 14 years and was appointed co-manager of the Company alongside him in April 2018, will be named as sole manager of the portfolio upon Mike’s retirement at the AGM. Roland has an impressive track record managing UK small & mid-cap portfolios since 2006 and is supported by the extensive resources of the UK Small & Mid Cap Team and the wider BlackRock platform.

OUTLOOK
Despite a strong start to 2019, markets are likely to remain volatile as economic uncertainty persists. In the UK, the damage to investor and consumer confidence wrought by the drawn out Brexit process means that the UK economy may well lag behind other major developed economies. However, our Portfolio Managers believe that despite the slowdown being faced in the near term in many countries, 2019 is not likely to be a year of global recession and that most major economies will continue to grow in the medium term.

The Company’s portfolio is well diversified by sector and geography, with a significant portion of revenues from portfolio companies generated through overseas exposure. The Portfolio Managers focus on well capitalised companies with strong management teams that are good cash generators and are therefore well placed for the current environment. Your Board is confident that the portfolio is constructed to continue to produce rewarding results for shareholders.

If shareholders would like to contact the Chairman personally please write to BlackRock Smaller Companies Trust plc, Exchange Place One, 1 Semple Street, Edinburgh EH3 8BL marked for the attention of the Chairman.

NICHOLAS FRY
Chairman
2 May 2019

1 In accordance with best corporate governance practice, Mr Gould will step down from the Audit Committee when he becomes Chairman on 4 June 2019.

INVESTMENT MANAGER’S REPORT FOR THE YEAR ENDED 28 FEBRUARY 2019

MARKET REVIEW AND OVERALL INVESTMENT PERFORMANCE
The UK equity market has seen an increase in volatility from the extreme low levels witnessed in recent years. The early months of 2018 saw significant declines in markets globally, followed by a sharp rebound at the beginning of the second quarter. October and November saw a pronounced market sell-off, with the most severe falls saved for highly rated/higher momentum growth shares. This was a headwind to our growth biased investment style. Whilst the rising US 10 year bond yield may have been a catalyst for the sell off, there were many factors at play: concerns around the pace of US interest rate rises, uncertainty over trade disputes, and fears about the strength of the US and Chinese economies.

PERFORMANCE REVIEW
The Company’s NAV per share (debt at par) fell by 6.6% which compares to a fall in the benchmark index of 8.2% and the FTSE 100 Index which decreased by 2.2%. (All percentages stated without income reinvested).

Despite the challenging environment for our strategy during the financial year, positive stock selection enabled the Company to deliver its 16th consecutive year of outperformance relative to the benchmark. Key contributors to performance during the year were IntegraFin, YouGov, Faroe Petroleum, Gulf Keystone Petroleum and AB Dynamics, with each contributing between 0.4% and 0.6% to relative performance.

IntegraFin, the UK savings platform for financial advisers, was the largest contributor to performance during the year. Since purchasing the shares at the IPO last year the company has delivered good results, with the platform seeing continued strong net inflows despite the increased levels of volatility in the market. YouGov continues to deliver strong organic growth and improving margins with profits significantly ahead of consensus. The company has been successfully delivering on its strategy of expanding and developing data analytics products for specialised sectors beyond its traditional market research business. We believe this offers a large opportunity for growth. Shares in Faroe Petroleum soared following a hostile bid, which was ultimately successful, from its largest shareholder, Norwegian oil and gas firm DNO. Shares in Gulf Keystone Petroleum rallied as its Shaikan oil field is performing well, with average production above the upper end of guidance for the company’s 2018 financial year. The company agreed an investment plan to increase the field’s production over the next 12-18 months, and with construction work now underway, the business remains on track to meet production targets by early 2020. AB Dynamics reported record full year revenue and adjusted profits, which increased by 51% and 78% respectively year on year, and management commented on the positive outlook for the new financial year. AB Dynamics is involved in the manufacture of testing products for the global automotive industry, where the move to more autonomous vehicle technologies has driven, and will continue to drive, an increase in automotive research and development spend from which AB Dynamics is well placed to benefit.

Aside from those shares that were caught up in the falls of the fourth quarter of 2018, which in our portfolio were frequently shares that simply erased gains from earlier in the year, some of the largest negative contributors during the year have been businesses exposed to the challenging trading environment facing UK retailers. Fashion brand Superdry, for example, fell after the company issued a number of profit warnings during the year. Some elements, such as the “Beast from the East” were beyond their control, however there were also system issues resulting in clearance activity that impacted gross margins. With a lack of clarity on the solution to these issues, we sold the position during the year. Gear4Music, the UK’s leading supplier of musical instruments and accessories, fell after the company warned that earnings for the 2019 financial year are expected to be “slightly below the 2018 financial year”. The company delivered strong sales growth of 41%, however the focus on gaining market share came at the cost of gross margins. In addition capacity issues in its York distribution centre between Black Friday and Christmas, where the company failed to meet demand, held back further sales growth.

ACTIVITY
As stated at the half-year, we had been increasing the concentration of the portfolio by selling a number of holdings where our conviction had weakened. We continued to do so through the second half of the financial year and the number of holdings is now 122, down from 156 this time last year.

During the later stages of 2018, we reduced the Company’s level of gearing in response to the elevated levels of market volatility, however more recently we have started to reinvest the cash that we raised back into the market.

We purchased a new holding via a placing in Diversified Gas & Oil, an owner and operator of onshore US oil and gas producing assets. The company is focused on growth both organically and through acquisitions of mature, low risk wells, enhancing operations and driving efficiencies to increase profitability.

Another recent purchase is IG Design Group, the largest gift packaging group in the world. The company has generated excellent sales growth across all regions globally, whilst also benefiting from efficiency improvements.

We purchased a new holding in Future, the specialist media publisher. The company has reported strong earnings in recent market updates, while its best in class technology platform should support future organic growth in its attractive end markets.

We have continued adding to our position in IntegraFin, after the IPO. We believe that the company is benefiting from an attractive industry backdrop; its differentiated business model and proprietary technology provides an attractive long term growth opportunity.

PORTFOLIO POSITIONING
Portfolio positioning is very much a result of stock selection. Sector positioning relative to the benchmark remains broadly unchanged from previous reports, which we feel reflects the conviction that we have in our core holdings. Relative to our benchmark we are overweight financial services companies, media companies and industrial engineers. Within the financial services sector our holdings have more of a focus on equities and outsourcing services. Holdings include IntegraFin, Premier Asset Management Group, Liontrust Asset Management, Polar Capital Holdings and XPS Pensions Group. Our media companies include 4imprint Group and Next Fifteen Communications which are both heavily exposed to the US, and YouGov which is adapting its business to changing customer demands opening up future channels for growth. Our engineering holdings include Bodycote, Trifast and AB Dynamics. These are all very internationally focused businesses with strong market positions that are exposed to attractive end markets.

We remain underweight in travel & leisure companies, food producers, general retailers; many of these companies are much more UK focused. We are also underweight software and computer services businesses as ongoing uncertainty could continue to impact business investment decisions, such as IT spend.

We have maintained a high exposure to international companies, with around half of the revenues of our portfolio originating from overseas. We remain cautious on the outlook for the UK. Our UK exposure is very deliberate, either exposed to more defensive businesses, or to those benefiting from positive structural or cyclical trends which can benefit from the current environment, such as Big Yellow, Workspace Group and Breedon.

Market Capitalisation of our Portfolio Companies as at 28 February 2019

£0m to £200m

13.30

£200m to £600m

52.00

£600m to £1,500m

26.50

£1,500m +

8.20

Source: BlackRock.

OUTLOOK
The increased volatility during the year was certainly a challenge, in particular during the final quarter of 2018, given the sell-off in quality and growth shares. Markets have made a strong start to 2019, however we continue to believe that elevated levels of volatility may persist.

Whilst this has been a long cycle there are few of the traditional signs we would expect ahead of a global recession. Despite moderating expectations for real GDP growth, the global economy remains robust overall. The US, which has been leading the charge in fuelling the global economy for a number of years remains ahead of most other major economies.

We remain cautious on the UK economy relative to other major developed economies. As we ‘progress’ along the Brexit timeline the outlook remains uncertain. We therefore see the possibility of below trend economic growth continuing for some time.

We do however remain confident in the outlook for the companies in our portfolio given our exposure to market leading global businesses, which are operating in attractive end markets and run by strong management teams. The market has become unforgiving of those companies that fail to deliver. It is therefore important for us to be confident that the investment thesis for each of our holdings remains intact. We also take comfort in the merits of our proven investment process over the long term through all market conditions. One of our key investment criteria is balance sheet strength, so should uncertainty persist, and as we move to the later stages of the economic cycle, we would expect investors to shelter in financially strong businesses: the type of businesses of which our portfolio predominantly consists.

I will be retiring after the AGM in June, having served as Portfolio Manager for more than 16 years. It has been a thoroughly enjoyable experience, and rarely have I had a dull day. We are indeed fortunate that our investment universe has always included many fast growing, truly differentiated companies often run by highly impressive and dynamic management teams. For us the challenge has always been to meet these teams and start an investment position in the Company. Our success over the years has been built on the success of these great companies and their managements. I am very grateful to them; it really has been a privilege to meet them on a regular basis. In a large universe, spotting the emerging winners is not always easy, but many sell-side brokers and analysts have helped us to identify and meet the most exciting companies. They too have been key to the Company's performance. Board members over the years have invariably been very supportive to me, and I am particularly appreciative of Nick’s unfailingly constructive chairmanship. I am also grateful for the loyalty of shareholders; I have always enjoyed meeting them on my visits around the UK, and of course at the AGM. At BlackRock I have been fortunate to be part of a closely knit team, with a clear investment approach which all of us are bought into. Throughout this period I have worked closely with Roland Arnold, and I wish Roly the best of success in the future as Portfolio Manager of the Company. I will remain a shareholder and will be maintaining a keen interest in progress.

A leading supplier of promotional products operating almost wholly in the US market. It sells an extensive range of products to businesses and organisations of all sizes, typically personalised with the customers’ brand or logo. Its growth is underpinned by a range of data-driven traditional and online marketing.

Provider of a leading investment platform, called Transact, to UK financial advisers and their clients through proprietary technology, premium service, a wide range of tax wrappers and an extensive choice of assets.

A base metals producer with copper assets in Kazakhstan and zinc and lead assets in North Macedonia. The company is one of the lowest cost producers in the industry, and the strong balance sheet and cash generation has seen the group historically return cash to shareholders.

Provider of self-storage solutions for both individuals and businesses, in highly visible and accessible locations. It is focused on London and the South East. The company has a market leading brand, protected by high barriers to entry in terms of limited land availability and planning restrictions, and has generated strong operating cash flows over the long term.

6

Robert WaltersRecruitmentPortfolio value£13,244,000Percentage of portfolio 1.9%

A global specialist professional recruitment consultancy. The company operates across 30 countries and employs over 4,100 people, providing services across permanent, interim and contract work placements. The company is seeing good growth in most territories with over 70% of net fee income derived from outside the UK.

A leading developer and manufacturer of innovative and technologically advanced products for the global advanced wound care, surgical and wound closure markets. It manufactures a wide range of products including those marketed under the brands ActivHeal®, LiquiBand® and RESORBA®.

All percentages reflect the value of the holding as a percentage of total investments. Together, the ten largest investments represent 18.8% of total investments (ten largest investments as at 28 February 2018: 16.5%). All holdings are in ordinary shares unless otherwise stated.

FIFTY LARGEST INVESTMENTS AS AT 28 FEBRUARY 2019

Company

Business activity

Market
value
£'000

% of total
portfolio

4imprint Group

Supply of promotional merchandise in the US

16,555

2.3

IntegraFin

Provision of an investment platform for financial advisers

14,919

2.1

YouGov

Provision of survey data specialist data analytics

14,805

2.1

Central Asia Metals

Production of base metals with operations in Kazakhstan and North Macedonia

13,820

2.0

Big Yellow

Provision of self-storage facilities

13,663

1.9

Robert Walters

Provision of specialist professional recruitment services

13,244

1.9

Advanced Medical Solutions

Development and supply of products for the global wound care and wound closure markets

12,220

1.7

Fuller Smith & Turner – A Shares

Ownership of and management of pubs in the London area and South East England

Supply of marketing and research services principally to the pharmaceuticals sector

5,837

0.8

Grafton

Operation of builders merchants in the UK, Ireland and Netherlands

5,779

0.8

Eland Oil & Gas

Production of oil in onshore Nigeria

5,688

0.8

------------------

------------------

50 largest investments

469,943

66.5

------------------

------------------

Remaining investments

237,207

33.5

------------------

------------------

Total

707,150

100.0

===========

===========

A complete listing of all the Company’s most up-to-date portfolio holdings is given at the Company’s website at the following link: blackrock.com/uk/individual/literature/policies/brsct-portfolio-disclosure.pdf.

PORTFOLIO HOLDINGS IN EXCESS OF 3% OF ISSUED SHARE CAPITAL

At 28 February 2019, the Company did not hold any equity investments comprising more than 3% of any Company’s share capital other than as disclosed in the table below:

The Directors present the Strategic Report of the Company for the year ended 28 February 2019. The aim of the Strategic Report is to provide shareholders with the information to assess how the Directors have performed their duty to promote the success of the Company for the collective benefit of shareholders.

PRINCIPAL ACTIVITY
The Company carries on business as an investment trust and its principal activity is portfolio investment. Investment trusts, like unit trusts and OEICs, are pooled investment vehicles which allow exposure to a diversified range of assets through a single investment, thus spreading, although not eliminating investment risk.

OBJECTIVE
The Company’s prime objective is to achieve long term capital growth for shareholders through investment mainly in smaller UK quoted companies.

No material change will be made to the Company’s investment objective without shareholder approval.

STRATEGY, BUSINESS MODEL AND INVESTMENT POLICY
To achieve its investment objective the Company invests predominantly in UK Smaller Companies which are listed on the London Stock Exchange or on the Alternative Investment Market (AIM), with a limit on the level of AIM investments that may be held within the portfolio of 50% of the portfolio by value. The Company may also invest in securities which are listed overseas but have a secondary UK quotation. Although investments are primarily in companies listed on recognised stock exchanges, the Investment Manager may also invest in unquoted securities with the prior approval of the Board. At 28 February 2019 the Company did not hold any unquoted investments in its portfolio.

BUSINESS MODEL
The Company’s business model follows that of an externally managed investment trust. Therefore, the Company does not have any employees and outsources its activities to third party service providers including the Manager, who is the principal service provider. The management of the investment portfolio and the administration of the Company have been contractually delegated to the Manager who in turn (with the permission of the Company) has delegated certain investment management and other ancillary services to the Investment Manager. The Manager, operating under guidelines determined by the Board, has direct responsibility for the decisions relating to the day-to-day running of the Company and is accountable to the Board for the investment, financial and operating performance of the Company.

The Company delegates fund accounting services to BIM (UK), which in turn sub-delegates these services to BNYM. Other service providers include the Depositary (also BNYM) and the Registrar, Computershare Investor Services PLC. Prior to 1 November 2017, the entity appointed as the Company’s Depositary was BNY Mellon Trust & Depositary (UK) Limited (BNYMTD). The Depositary has sub-delegated the provision of custody services to the Asset Servicing division of BNYM. Details of the contractual terms with the Manager and the Depositary and more details of the sub-delegation arrangements in place governing custody services are set out in the Directors’ Report contained within the Company's 2019 Annual Report.

INVESTMENT POLICY
The Manager has adopted a consistent investment process, focusing on good quality growth companies that are trading well; stock selection is the primary focus but consideration is also given to sector weightings and underlying themes. Whilst there are no set limits on individual sector exposures against the Company’s benchmark, a schedule of sector weightings is presented at each Board meeting for review. In applying the investment objective, the Investment Manager expects the Company to be fully invested and to borrow as and when appropriate. The Company seeks to achieve an appropriate spread of investment risk by investing in a number of holdings across a range of sectors.

CHANGE TO THRESHOLD LIMIT
Previously, the Company could not hold more than 5% of the share capital of any company in which it has an investment. The Board has approved a change to this restriction whereby this limit will be increased to 6%. The rationale for the change is to give the portfolio manager additional flexibility at the margin when investing in Initial Public Offerings, where the limit can result in the Company being undersubscribed for popular offerings when applications are scaled back. As the amendment does not constitute a material change in investment policy requiring (inter alia) approval of shareholders at a general meeting of the Company, it will take immediate effect.

In addition, while the Company may hold shares in other listed investment companies (including investment trusts) the Board has agreed that the Company will not invest more than 15% of its total assets in other UK listed investment companies. The Investment Manager will not deal in derivatives without the prior approval of the Board and derivative instruments, such as options and futures contracts, have not been used during the year.

INVESTMENT PHILOSOPHY
The Investment Manager seeks to identify companies which it believes have superior long-term growth prospects and the management in place to take advantage of these prospects. This is done through monitoring market newsflow carefully, looking for signs of outperformance, and by working closely with BlackRock’s network of brokers. Initially, if the Investment Manager is sufficiently impressed with a company’s prospects, it will look to take a small position, usually 0.25% to 0.50% of the Company’s net assets, in a new holding. These holdings will be closely monitored, and members of the portfolio management team will meet with management on a regular basis. If these companies continue to prosper and make the most of opportunities, the Investment Manager will gradually add to the portfolio holding. Where initial expectations are disappointed, the holding will be sold. The anticipation is that each holding will develop into a core holding over time; one that meets the Investment Manager’s criteria for high quality growth companies. These criteria are shown in the ‘steering wheel’ diagram set out in the Strategic Report contained within the Company’s 2019 Annual Report.

Valuation is a key consideration; it is important not to overpay for new holdings. However, investment fundamentals are also important and the Investment Manager may be prepared to pay what seems like a high price if it believes that long term growth prospects are very strong. Generally, a company will be held within the portfolio if it meets the criteria for core holdings; in respect of recent investments, the Investment Manager will consider whether they have the potential to meet these criteria. Holdings will be sold if there are concerns that the investment case has changed in a negative way. Holdings will be reduced where the position size becomes too large and raises concerns about risk and diversification. The general aim is for portfolio holdings not to exceed 3% of the Company’s net assets (excluding cash fund investments held for cash management purposes). As the investments within the portfolio become larger over time, the Portfolio Manager will continue to assess growth prospects in comparison to smaller businesses operating within similar markets. New holdings must have a market cap beneath £2bn, however holdings that move above that level will be maintained providing the investment adheres to the original thesis, and remains the most attractive opportunity that can be found amongst a comparable peer group. In accordance with the guidelines, the Portfolio Manager will sell any stock that enters the FTSE 100 within thirty days of entry.

The Investment Manager believes that consistent outperformance can be achieved by employing a combination of bottom-up and top-down analysis, based upon strong fundamental research.

In building a robust portfolio the Investment Manager will also consider the macro-economic background, working with strategists, economists and other teams internally and externally to understand this better. It also works closely with BlackRock’s risk team to assess the risks in the structure of the portfolio. Any necessary adjustments will be made to the portfolio to ensure that it is structured in an appropriate way from a macro and risk point of view.

GEARING POLICY
The Board believes that gearing can add value over the long term. In May 2017, the Company issued £25 million senior unsecured fixed rate private placement notes (the “Notes”) at a coupon of 2.74% with a 20 year bullet maturity. This is in addition to the Company’s £15 million debenture maturing in 2022. Variable rate financing available to the Company consists of a £35 million three-year revolving loan facility with Scotiabank (Ireland) Limited and an uncommitted overdraft facility of £10 million with The Bank of New York Mellon (International) Limited.

The benefits of gearing are discussed and the effective level agreed with the Manager regularly. It is intended that gearing will not exceed 15% of the net assets of the Company at the time of the drawdown of the relevant borrowings and at the balance sheet date gearing stood at 4.9% of net assets (with debt at par). Under normal operating circumstances, it is envisaged that gearing will be within a range between 0%-15% of net assets.

PORTFOLIO ANALYSIS
A detailed analysis of the portfolio has been provided above.

PERFORMANCE
Details of the Company’s performance including the dividend are set out in the Chairman’s Statement. The Chairman’s Statement and the Investment Manager’s Report form part of this Strategic Report and include a review of the main developments during the year, together with information on investment activity within the Company’s portfolio.

RESULTS AND DIVIDENDS
The results for the Company are set out in the Income Statement in the Financial Statements. The total net loss for the year, after taxation, was £33,946,000 (2018: profit £135,381,000) of which the revenue return amounted to £16,123,000 (2018: profit of £14,029,000), and the capital loss amounted to £50,069,000 (2018: profit £121,352,000).

The Company’s revenue return amounted to 33.67p per share (2018: 29.30p). The Directors recommend the payment of a final dividend of 19.20p per share as set out in the Chairman’s Statement.

KEY PERFORMANCE INDICATORS
At each Board meeting, the Directors consider a number of performance measures to assess the Company’s success in achieving its objectives. The key performance indicators (KPIs) used to measure the progress and performance of the Company over time and which are comparable to those reported by other investment trusts are set out below.

Key Performance Indicators

Year ended
28 February 2019

Year ended
28 February 2018

NAV per share (debt at par value)1

-6.6%

20.8%

NAV per share (debt at fair value)1

-6.6%

21.2%

NAV per share (debt at par value, capital only)1

-6.8%

20.7%

NAV per share total return performance (debt at fair value)

-4.9%

23.2%

Share price

0.4%

25.0%

Benchmark return1

-8.2%

8.3%

Average discount to NAV with debt at fair value

7.9%

13.0%

Revenue return per share

33.67p

29.30p

----------------

----------------

Ongoing charges ratio2,3

0.7%

0.7%

----------------

----------------

Ongoing charges ratio3 (including performance fees)

n/a

1.0%

==========

==========

1 Without income reinvested.2 Calculated as a percentage of average shareholders’ funds and using operating expenses, excluding performance fees, finance costs, transaction costs and taxation in accordance with AIC guidelines.3 With effect from 1 March 2018 the Company’s management fee and performance fee arrangements changed. The new fee basis is set out in note 4 of the Financial Statements, and the performance fee was removed.

Sources: BlackRock and Datastream.

Additionally, the Board regularly reviews many indices and ratios to understand the impact on the Company’s relative performance of the various components such as asset allocation and stock selection. The Board also reviews the performance and ongoing charges of the Company against a peer group of UK smaller companies trusts and open-ended funds.

The Directors recognise that it is in the long-term interests of shareholders that shares do not trade at a significant discount to their prevailing net asset value. During the year the shares traded between a discount of 1.1% and a discount of 12.3%, ending the year at 5.0% (based on NAV with debt at fair value).

The Board believes that the best way of addressing the discount over the long term is to create demand for the shares in the secondary market. To this end the Investment Manager is devoting considerable effort to broadening the awareness of the Company’s outstanding attractions, particularly to wealth managers and to the wider retail shareholder market. Over the last eight years, the number of shares held by retail shareholders has increased from 29.5% (as at 28 February 2011) to 62.3% at 28 February 2019.

PRINCIPAL RISKS
The Company is exposed to a variety of risks and uncertainties. As required by the UK Corporate Governance Code (the UK Code) the Board has in place a robust ongoing process to assess and monitor the principal risks of the Company including those that would threaten its business model, future performance, solvency or liquidity. A core element of this process is the Company’s risk register which identifies the risks facing the Company, the likelihood and potential impact of each risk and the controls established for mitigation. A residual risk rating is calculated for each risk.

The risk register, its method of preparation and the operation of key controls in BlackRock’s and third-party service providers’ systems of internal control are reviewed on a regular basis by the Audit Committee. In order to gain a more comprehensive understanding of BlackRock’s and other third-party service providers’ risk management processes and how these apply to the Company’s business, BlackRock’s internal audit department provides an annual presentation to the Audit Committee Chairman setting out the results of testing performed in relation to BlackRock’s internal control processes. The Audit Committee also periodically receives presentations from BlackRock’s Risk & Quantitative Analysis team and reviews Service Organisation Control (SOC 1) reports from the Company’s service providers. The current risk register categorises the Company’s main areas of risk as follows:

· Investment performance risk;

· Market risk;

· Income/dividend risk;

· Legal & compliance risk;

· Operational risk;

· Financial risk; and

· Marketing risk.

The principal risks and uncertainties faced by the Company during the financial year, together with the potential effects, controls and mitigating factors, are set out in the following table.

Principal Risk

Mitigation/Control

Investment performance risk
Returns achieved are reliant primarily upon the performance of the portfolio.
The Board is responsible for:
· deciding the investment strategy to fulfil the Company’s objective; and
· monitoring the performance of the Investment Manager and the implementation of the investment strategy.
An inappropriate investment strategy may lead to:
· poor performance compared to the Benchmark Index and the Company’s peer group;
· a loss of capital; and
· dissatisfied shareholders.

To manage this risk the Board:
· regularly reviews the Company’s investment mandate and long term strategy;
· has set investment restrictions and guidelines which the Investment Manager monitors and regularly reports on;
· receives from the Investment Manager a regular explanation of stock selection decisions, portfolio exposure, gearing and any changes in gearing and the rationale for the composition of the investment portfolio;
· monitors the maintenance of an adequate spread of investments in order to minimise the risks associated with factors specific to particular sectors, based on the diversification requirements inherent in the investment policy; and
· receives reports showing the Company’s performance against the benchmark.

Market risk
Market risk arises from volatility in the prices of the Company’s investments influenced by currency, interest rate or other price movements. It represents the potential loss the Company might suffer through holding market positions in financial instruments in the face of market movements.
Market risk includes the potential impact of events which are outside the scope of the Company’s control.

The Board considers asset allocation, stock selection and levels of gearing on a regular basis and has set investment restrictions and guidelines which are monitored and reported on by the Investment Manager.
The Board monitors the implementation and results of the investment process with the Investment Manager.

Income/dividend risk
The amount of dividends and future dividend growth will depend on the performance of the Company’s underlying portfolio. In addition, any change in the tax treatment of the dividends or interest received by the Company may reduce the level of dividends received by shareholders.

The Board monitors this risk through the receipt of detailed income forecasts and considers the level of income at each Board meeting.
The Company has substantial revenue reserves which can be utilised.

Legal & Compliance risk
The Company has been approved by HM Revenue & Customs as an investment trust, subject to continuing to meet the relevant eligibility conditions and operates as an investment trust in accordance with Chapter 4 of Part 24 of the Corporation Tax Act 2010. As such, the Company is exempt from capital gains tax on the profits realised from the sale of its investments.
Any breach of the relevant eligibility conditions could lead to the Company losing investment trust status and being subject to corporation tax on capital gains realised within the Company’s portfolio. In such event the investment returns of the Company may be adversely affected.
Any serious breach could result in the Company and/or the Directors being fined or the subject of criminal proceedings or the suspension of the Company’s shares which would in turn lead to a breach of the Corporation Tax Act 2010.
Amongst other relevant laws and regulations, the Company is required to comply with the provisions of the Companies Act 2006, the Alternative Investment Fund Managers’ Directive, the UK Listing Rules and Disclosure Guidance and Transparency Rules and the Market Abuse Regulation.

The Investment Manager monitors investment movements and the amount of proposed dividends to ensure that the provisions of Chapter 4 of Part 24 of the Corporation Tax Act 2010 are not breached. The results are reported to the Board at each meeting.
Compliance with the accounting rules affecting investment trusts is also carefully and regularly monitored.
The Company Secretary and the Company’s professional advisers provide regular reports to the Board in respect of compliance with all applicable rules and regulations.

Operational risk
In common with most other investment trust companies, the Company has no employees. The Company therefore relies on the services provided by third parties. Accordingly, it is dependent on the control systems of the Manager, the Depositary and the Fund Accountant who maintain the Company’s assets, dealing procedures and accounting records.
The security of the Company’s assets, dealing procedures, accounting records and adherence to regulatory and legal requirements and the prevention of fraud depend on the effective operation of the systems of these other third party service providers.
Failure by any service provider to carry out its obligations to the Company could have a material adverse effect on the Company’s performance. Disruption to the accounting, payment systems or custody records could prevent the accurate reporting and monitoring of the Company’s financial position.

Due diligence is undertaken before contracts are entered into with third party service providers. Thereafter, the performance of the provider is subject to regular review and reported to the Board.
The Board reviews on a regular basis an assessment of the fraud risks that the Company could potentially be exposed to, and also a summary of the controls put in place by the Manager, the Depositary, the Custodian, the Fund Accountant and the Registrar designed specifically to mitigate these risks.
Most third-party service providers produce Service Organisation Control (SOC 1) reports to provide assurance regarding the effective operation of internal controls as reported on by their reporting accountants. These reports are provided to the Audit Committee.
The Company’s assets are subject to a strict liability regime and in the event of a loss of financial assets held in custody, the Depositary must return assets of an identical type or the corresponding amount, unless able to demonstrate the loss was a result of an event beyond its reasonable control.
The Board reviews the overall performance of the Manager, Investment Manager and all other third-party service providers and compliance with the Investment Management Agreement on a regular basis.
The Board also considers the business continuity arrangements of the Company’s key service providers.

Financial risk
The Company’s investment activities expose it to a variety of financial risks that include interest rate, credit and liquidity risk.
Further details are disclosed in the note 16 to the financial statements contained within the Company’s 2019 Annual Report, together with a summary of the policies for managing these risks.

Details of these risks are disclosed in note 16 to the financial statements, together with a summary of the policies for managing these risks.

Marketing risk
Marketing efforts are inadequate, do not comply with relevant regulatory requirements, and fail to communicate adequately with shareholders or reach out to potential new shareholders resulting in reduced demand for the Company’s shares and a widening discount.

The Board focuses significant time on communications with shareholders and reviewing marketing strategy and initiatives. All investment trust marketing documents are subject to appropriate review and authorisation.

VIABILITY STATEMENT
In accordance with provision C.2.2 of the UK Code, the Directors have assessed the prospects of the Company over a longer period than the 12 months referred to by the ‘Going Concern’ guidelines. The Board conducted this review for the period up to the AGM in 2024 being a five-year period from the date that this Annual Report will be approved by shareholders. This assessment term has been chosen as it represents a medium-term performance period over which investors in the smaller companies sector generally refer to when making investment decisions.

In making this assessment the Board has considered the following factors:

· The Company’s principal risks as set out above;

· The impact of a significant fall in UK equity markets on the value of the Company’s investment portfolio;

· The ongoing relevance of the Company’s investment objective in the current environment; and

· The level of demand for the Company’s ordinary shares.

The Board has also considered a number of financial metrics, including:

· The level of current and historic ongoing charges incurred by the Company;

· The discount to NAV;

· The level of income generated by the Company;

· Future income forecasts; and

· The liquidity of the Company’s portfolio.

The Company is an investment company with a relatively liquid portfolio. As at 28 February 2019, the Company held no unquoted investments and 58.5% of the Company’s portfolio investments were readily realisable and listed on the London Stock Exchange. The remaining 41.5% that were listed on the Alternative Investment Market are also considered to be readily realisable. The Company has largely fixed overheads which comprise a very small percentage of net assets. Therefore, the Board has concluded that, even in exceptionally stressed operating conditions, the Company would comfortably be able to meet its ongoing operating costs as they fall due.

However, investment companies may face other challenges, such as a significant decrease in size due to substantial share buy back activity. The Company has in place the authority to buy back up to 14.99% of issued share capital, but under current circumstances the Board does not envisage that this facility will need to be utilised. In making this assessment the Board has considered the Company’s performance which has outstripped the Company’s benchmark for the last sixteen consecutive years; the Company’s share price has outperformed the benchmark index by 8.6% over one year, 34.4% over three years and 41.9% over five years respectively (all performance calculations exclude income reinvestment).

Based on the results of their analysis, the Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of their assessment.

FUTURE PROSPECTS
The Board’s main focus is to achieve long term capital growth. The future performance of the Company is dependent upon the success of the investment strategy and, to a large extent, on the performance of financial markets. The outlook for the Company in the next twelve months is discussed in the Chairman’s Statement and the Investment Manager’s Report above.

SOCIAL, COMMUNITY AND HUMAN RIGHTS ISSUES
As an investment trust, the Company has no direct social or community responsibilities. However, the Directors believe that it is in shareholders’ interests to consider human rights issues, environmental, social and governance matters when selecting and retaining investments. Details of the Company’s policy on socially responsible investment are set out in the Corporate Governance Statement contained within the 2019 Annual Report.

MODERN SLAVERY ACT
As an investment vehicle the Company does not provide goods or services in the normal course of business, and does not have customers. Accordingly, the Directors consider that the Company is not required to make any slavery or human trafficking statement under the Modern Slavery Act 2015. In any event, the Board considers the Company’s supply chain, dealing predominantly with professional advisers and service providers in the financial services industry, to be low risk in relation to this matter.

DIRECTORS, GENDER REPRESENTATION AND EMPLOYEES
The Directors of the Company on 28 February 2019 are set out in the Directors’ biographies set out in the Governance section of the 2019 Annual Report. With effect from 1 April 2019 the Board consists of four male Directors and two female Directors. With effect from 4 June 2019 when Mr Fry will retire from the Board, the Board will consist of three male Directors and two female Directors. The Company’s policy on diversity is set in the Corporate Governance Statement contained within the Company’s 2019 Annual Report. The Company does not have any executive employees.

The Chairman’s Statement together with the Investment Manager’s Report form part of the Strategic Report. The Strategic Report was approved by the Board at its meeting on 2 May 2019.

BY ORDER OF THE BOARDSARAH BEYNSBERGER
For and on behalf of
BlackRock Investment Management (UK) Limited
Company Secretary
2 May 2019

RELATED PARTY TRANSACTIONS

The Manager was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. The Manager has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to the Investment Manager. Details of the fees payable to the Manager are set out in note 4.

The Manager provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BIM (UK). Further details of the investment management contract are disclosed in the Directors’ Report.

The investment management fee payable for the year ended 28 February 2019 amounted to £4,590,000 (2018: £3,884,000). As set out in note 4, with effect from 1 March 2018 the Company no longer has any performance fee arrangements in place. The performance fees accrued for the year ended 28 February 2018 totalled £1,794,000. At the period end, £2,099,000 was outstanding in respect of the management fee (2018: £1,965,000). There were no amounts outstanding in respect of the performance fee at the period end as this ceased to apply from 1 March 2018. As at 28 February 2018 £1,794,000 was outstanding in respect of the performance fee.

In addition to the above services, BlackRock provided the Company with marketing services. The total fees paid or payable for these services for the year ended 28 February 2019 amounted to £113,000 including VAT (2018: £155,000). Marketing fees of £152,000 (2018: £189,000) were outstanding at year end.

Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report contained witin the 2019 Annual Report. At 28 February 2019, an amount of £13,000 (2018: £13,000) was outstanding in respect of Directors’ fees.

The Board consists of six non-executive Directors, all of whom are considered to be independent by the Board. None of the Directors has a service contract with the Company. For the year ended 28 February 2019, the Chairman received an annual fee of £40,000, the Chairman of the Audit Committee received an annual fee of £30,000 and each other Director received an annual fee of £26,750. With effect from 1 March 2019, the Chairman’s fee increased to £42,500, the Chairman of the Audit Committee’s fee increased to £32,500 and each of the other Directors’ fees increased to £28,500.

As at 2 May 2019, with the exception of Ronald Gould (who joined the Board on 1 April 2019), all members of the Board held shares in the Company. Nicholas Fry held 40,000 ordinary shares, Michael Peacock held 1,000 ordinary shares, Robbie Robertson held 91,062 ordinary shares, Caroline Burton held 5,500 ordinary shares and Susan Platts-Martin held 2,000 ordinary shares.

STATEMENT OF DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT AND FINANCIAL STATEMENTS

The Directors are responsible for preparing the Annual Report and Financial Statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice).

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company as at the end of each financial year and of the profit or loss of the Company for that year.

In preparing those financial statements, the Directors are required to:

· state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Financial Statements and the Directors’ Remuneration Report comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are also responsible for preparing the Strategic Report, Directors’ Report, the Directors’ Remuneration Report, the Corporate Governance Statement and the Report of the Audit Committee in accordance with the Companies Act 2006 and applicable regulations, including the requirements of the Listing Rules and the Disclosure Guidance and Transparency Rules. The Directors have delegated responsibility to the Manager for the maintenance and integrity of the Company’s corporate and financial information included on BlackRock’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Each of the Directors, whose names are listed in the Governance section of the 2019 Annual Report, confirms that, to the best of their knowledge:

· the Financial Statements, prepared in accordance with applicable accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company; and

· the Strategic Report contained in the Annual Report and Financial Statements includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.

The UK Code also requires Directors to ensure that the Annual Report and Financial Statements are fair, balanced and understandable. In order to reach a conclusion on this matter, the Board has requested that the Audit Committee advise on whether it considers that the Annual Report and Financial Statements fulfil these requirements. The process by which the Committee has reached these conclusions is set out in the Audit Committee’s report contained within the Company’s 2019 Annual Report. As a result, the Board has concluded that the Annual Report and Financial Statements for the year ended 28 February 2019, taken as a whole, are fair, balanced and understandable and provide the information necessary for shareholders to assess the Company’s position, performance, business model and strategy.

FOR AND ON BEHALF OF THE BOARD
NICHOLAS FRY
Chairman
2 May 2019

INCOME STATEMENT FOR THE YEAR ENDED 28 FEBRUARY 2019

2019

2018

Notes

Revenue
£’000

Capital
£’000

Total
£’000

Revenue
£’000

Capital
£’000

Total
£’000

(Losses)/gains on investments held at fair value through profit or loss

–

(44,856)

(44,856)

–

127,657

127,657

Gains/(losses) on foreign exchange

–

16

16

–

(8)

(8)

Income from investments held at fair value through profit or loss

3

18,434

–

18,434

16,235

21

16,256

Other income

3

135

–

135

16

–

16

----------------

----------------

----------------

----------------

----------------

----------------

Total income/(expenses)

18,569

(44,840)

(26,271)

16,251

127,670

143,921

----------------

----------------

----------------

----------------

----------------

----------------

Expenses

Investment management and performance fees

4

(1,147)

(3,443)

(4,590)

(971)

(4,707)

(5,678)

Operating expenses

5

(650)

(29)

(679)

(625)

(22)

(647)

----------------

----------------

----------------

----------------

----------------

----------------

Total operating expenses

(1,797)

(3,472)

(5,269)

(1,596)

(4,729)

(6,325)

=========

=========

=========

=========

=========

=========

Net profit/(loss) on ordinary activities before finance costs and taxation

16,772

(48,312)

(31,540)

14,655

122,941

137,596

Finance costs

(586)

(1,757)

(2,343)

(530)

(1,589)

(2,119)

----------------

----------------

----------------

----------------

----------------

----------------

Net profit/(loss) on ordinary activities before taxation

16,186

(50,069)

(33,883)

14,125

121,352

135,477

Taxation

(63)

–

(63)

(96)

–

(96)

=========

=========

=========

=========

=========

=========

Net profit/(loss) on ordinary activities after taxation

16,123

(50,069)

(33,946)

14,029

121,352

135,381

=========

=========

=========

=========

=========

=========

Revenue return/(loss) per ordinary share (pence)

7

33.67

(104.57)

(70.90)

29.30

253.45

282.75

=========

=========

=========

=========

=========

=========

The total column of this statement represents the Company’s profit and loss account. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies (AIC). All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the year. All income is attributable to the equity holders of the Company.

The net profit/(loss) for the year disclosed above represents the Company’s total comprehensive income/(loss).

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 28 FEBRUARY 2019

Note

Called
up share
capital
£’000

Share
premium
account
£’000

Capital
redemption
reserve
£’000

Capital
reserves
£’000

Revenue
reserve
£’000

Total
£’000

For the year ended 28 February 2019

At 28 February 2018

12,498

38,952

1,982

646,791

21,219

721,442

Total comprehensive income/(expenses):

Net (loss)/profit for the year

–

–

–

(50,069)

16,123

(33,946)

Transactions with owners, recorded directly to equity:

Dividends paid1

6

–

–

–

–

(13,407)

(13,407)

----------------

----------------

----------------

----------------

----------------

----------------

At 28 February 2019

12,498

38,952

1,982

596,722

23,935

674,089

=========

=========

=========

=========

=========

=========

For the year ended 28 February 2018

At 28 February 2017

12,498

38,952

1,982

525,439

18,202

597,073

Total comprehensive income:

Net profit for the year

–

–

–

121,352

14,029

135,381

Transactions with owners, recorded directly to equity:

Dividends paid2

6

–

–

–

–

(11,012)

(11,012)

----------------

----------------

----------------

----------------

----------------

----------------

At 28 February 2018

12,498

38,952

1,982

646,791

21,219

721,442

=========

=========

=========

=========

=========

=========

1 Interim dividend paid in respect of the year ended 28 February 2019 of 12.00p was declared on 29 October 2018 and paid on 26 November 2018. Final dividend paid in respect of the year ended 28 February 2018 of 16.00p was declared on 27 April 2018 and paid on 15 June 2018.

2 Interim dividend paid in respect of the year ended 28 February 2018 of 10.00p was declared on 30 October 2017 and paid on 15 December 2017. Final dividend paid in respect of the year ended 28 February 2017 of 13.00p was declared on 2 May 2017 and paid on 19 June 2017.

BALANCE SHEET AS AT 28 FEBRUARY 2019

Notes

2019
£’000

2018
£’000

Fixed assets

Investments held at fair value through profit or loss

707,150

792,060

----------------

----------------

Current assets

Debtors

8

2,379

2,680

Cash and cash equivalents

11,719

13,792

----------------

----------------

14,098

16,472

----------------

----------------

Creditors – amounts falling due within one year

9

(4,961)

(12,420)

----------------

----------------

Net current assets

9,137

4,052

----------------

----------------

Total assets less current liabilities

716,287

796,112

----------------

----------------

Creditors – amounts falling due after more than one year

10

(42,198)

(74,670)

----------------

----------------

Net assets

674,089

721,442

=========

=========

Capital and reserves

Called up share capital

11

12,498

12,498

Share premium account

38,952

38,952

Capital redemption reserve

1,982

1,982

Capital reserves

596,722

646,791

Revenue reserve

23,935

21,219

----------------

----------------

Total shareholders’ funds

674,089

721,442

=========

=========

Net asset value per ordinary share (debt at par value) (pence)

7

1,407.88

1,506.78

=========

=========

Net asset value per ordinary share (debt at fair value) (pence)

7

1,400.57

1,500.04

=========

=========

The financial statements were approved and authorised for issue by the Board of Directors on 2 May 2019 and signed on its behalf by Nicholas Fry, Chairman and Michael Peacock, Director and Audit Committee Chairman.

BlackRock Smaller Companies Trust plc

Registered in Scotland, No. 6176

STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 28 FEBRUARY 2019

2019
£’000

2018
£’000

Operating activities

Net (loss)/profit before taxation

(33,883)

135,477

Add back finance costs

2,343

2,119

Losses/(gains) on investments held at fair value through profit or loss

1. PRINCIPAL ACTIVITY
The principal activity of the Company is that of an investment trust company within the meaning of section 1158 of the Corporation Tax Act 2010.

2. ACCOUNTING POLICIES
The principal accounting policies adopted by the Company are set out below.

(a) Basis of preparation
The Company presents its results and positions under FRS 102, ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland’ (FRS 102), which forms part of the revised Generally Accepted Accounting Practice (New UK GAAP) issued by the Financial Reporting Council (FRC) in 2013.

The financial statements have been prepared on a going concern basis in accordance with FRS 102 and the revised Statement of Recommended Practice – ‘Financial Statements of Investment Trust Companies and Venture Capital Trusts’ (SORP) issued by the Association of Investment Companies (AIC) in November 2014 and updated in January 2017 and the provisions of the Companies Act 2006.

The principal accounting policies adopted by the Company are set out below. Unless specified otherwise, the policies have been applied consistently throughout the year and are consistent with those applied in the preceding year. All of the Company’s operations are of a continuing nature.

The Company’s financial statements are presented in sterling, which is the currency of the primary economic environment in which the Company operates. All values are rounded to the nearest thousand pounds (£’000) except where otherwise stated.

(b) Presentation of Income Statement
In order to better reflect the activities of an investment trust company and in accordance with guidance issued by the AIC, supplementary information which analyses the Income Statement between items of a revenue and a capital nature has been presented on the face of the Income Statement.

(c) Segmental reporting
The Directors are of the opinion that the Company is engaged in a single segment of business being investment business.

(d) Income
Dividends receivable on equity shares are treated as revenue for the year on an ex-dividend basis. Where no ex-dividend date is available, dividends receivable on or before the year end are treated as revenue for the year. Provisions are made for dividends not expected to be received. The return on a debt security is recognised on a time apportionment basis.

Special dividends are recognised on an ex-dividend basis and are treated as capital or revenue depending on the facts or circumstances of each dividend.

Dividends are accounted for in accordance with Section 29 of FRS 102 on the basis of income actually receivable. Dividends from overseas companies continue to be shown gross of withholding tax.

Deposit interest receivable is accounted for on an accruals basis.

Where the Company has elected to receive its dividends in the form of additional shares rather than in cash, the cash equivalent of the dividend foregone is recognised in the revenue column of the Income Statement. Any excess in the value of the shares over the amount of the cash dividend is recognised in capital reserves.

(e) Expenses
All expenses, including finance costs, are accounted for on an accruals basis. Expenses have been charged wholly to the revenue column of the Income Statement, except as follows:

· expenses which are incidental to the acquisition or disposal of an investment are treated as capital. Details of transaction costs on the purchases and sales of investments are shown in Note 10 to the Financial Statements contained within the 2019 Annual Report;

· expenses are treated as capital where a connection with the maintenance or enhancement of the value of the investments can be demonstrated;

· the investment management fee and finance costs have been allocated 75% to the capital column and 25% to the revenue column of the Income Statement in line with the Board’s expected long term split of returns, in the form of capital gains and income respectively, from the investment portfolio.

(f) Taxation
The tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from net profit as reported in the Income Statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that were applicable at the balance sheet date.

Deferred taxation is recognised in respect of all timing differences at the financial reporting date, where transactions or events that result in an obligation to pay more taxation in the future or right to less taxation in the future have occurred at the balance sheet date. Deferred tax is measured on a non-discounted basis, at the average tax rates that are expected to apply in the periods in which the timing differences are expected to reverse based on tax rates and laws that have been enacted or substantively enacted by the balance sheet date. This is subject to deferred taxation assets only being recognised if it is considered more likely than not that there will be suitable profits from which the future reversal of the timing differences can be deducted.

(g) Investments held at fair value through profit or loss
The Company’s investments are classified as held at fair value through profit or loss in accordance with Section 11 and 12 of FRS 102 and are managed and evaluated on a fair value basis in accordance with its investment strategy.

All investments are designated upon initial recognition as held at fair value through profit or loss. Purchases of investments are recognised on a trade date basis. Sales of assets are recognised at the trade date of the disposal. Proceeds will be measured at fair value, which will be regarded as the proceeds of the sale less any transaction costs.

The fair value of the financial investments is based on their quoted bid price at the balance sheet date on the exchange on which the investment is quoted, without deduction for the estimated future selling costs.

Unquoted investments are valued by the Directors at fair value using International Private Equity and Venture Capital Valuation Guidelines. This policy applies to all current and non current asset investments of the Company.

Changes in the value of investments held at fair value through profit or loss and gains and losses on disposal are recognised in the Income Statement as ‘Gains or losses on investments held at fair value through profit or loss’. Also included within this heading are transaction costs in relation to the purchase or sale of investments.

(h) Dividends payable
Under Section 32 of FRS 102 final dividends should not be accrued in the financial statements unless they have been approved by shareholders before the balance sheet date. Dividends payable to equity shareholders are recognised in the Statement of Changes in Equity when they have been approved by shareholders and have become a liability of the Company. Interim dividends are recognised in the financial statements in the period in which they are paid.

(i) Foreign currency translation
In accordance with Section 30 of FRS 102, the Company is required to nominate a functional currency, being the currency in which the Company predominately operates. The functional and reporting currency is sterling, reflecting the primary economic environment in which the Company operates. Transactions in foreign currencies are translated into sterling at the rates of exchange ruling on the date of the transaction. Foreign currency monetary assets and liabilities are translated into sterling at the rates of exchange ruling at the Balance Sheet date. Profits and losses thereon are recognised in the capital column of the Income Statement and taken to the capital reserve.

(j) Shares repurchased and held in Treasury
The full cost of shares repurchased and held in treasury is charged to capital reserves. Where treasury shares are subsequently reissued, any surplus is taken to the share premium account.

(k) Debtors
Debtors include sales for future settlement, other debtors and pre-payments and accrued income in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

(l) Creditors
Creditors include purchases for future settlement, interest payable, share buyback costs and accruals in the ordinary course of business. Creditors, loans and debentures are classified as creditors – amounts due within one year if payment is due within one year or less (or in the normal operating cycle of the business if longer). If not, they are presented as creditors – amounts falling due after more than one year.

(m) Cash and cash equivalents
Cash comprises cash in hand and on demand deposits and bank overdrafts repayable on demand. Cash equivalents include short term, highly liquid investments, that are readily convertible to known amounts of cash and that are subject to an insignificant risk of changes in value.

(n) Critical accounting estimates and judgements
The Company makes estimates and assumptions concerning the future. The resulting accounting estimates and assumptions will, by definition, seldom equal the related actual results. Estimates and judgements are regularly evaluated and are based on historical experience and other factors, including expectations of future events and that are believed to be reasonable under the circumstances. The Directors do not believe that any accounting judgements or estimates have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year.

3. INCOME

2019
£’000

2018
£’000

Investment income:

UK listed dividends

14,020

11,654

UK listed scrip dividends

54

144

UK listed special dividends

1,372

591

Property income dividends

777

879

Overseas listed dividends

2,053

2,473

Overseas listed scrip dividends

–

70

Overseas listed special dividends

158

424

----------------

----------------

18,434

16,235

----------------

----------------

Other income:

Bank interest

14

1

Interest from the Cash Fund

121

15

----------------

----------------

135

16

----------------

----------------

Total

18,569

16,251

=========

=========

No special dividends have been recognised in capital during the year (2018: £21,000).

Dividends and interest received in cash in the period amounted to £17,762,000 and £128,000 (2018: £15,829,000 and £15,000) respectively.

Comparative figures
Interest of £121,000 (2018: £15,000) from the Cash Fund has been reclassified from “Income from investments held at fair value through profit or loss” to “Other income” in the Income Statement. This reclassification had no impact on the revenue return for the respective periods or the net assets as at 28 February 2019.

4. INVESTMENT MANAGEMENT AND PERFORMANCE FEES

2019

2018

Revenue
£’000

Capital
£’000

Total
£’000

Revenue
£’000

Capital
£’000

Total
£’000

Investment management fee

1,147

3,443

4,590

971

2,913

3,884

Performance fee

–

–

–

–

1,794

1,794

----------------

----------------

----------------

----------------

----------------

----------------

Total

1,147

3,443

4,590

971

4,707

5,678

=========

=========

=========

=========

=========

=========

Up until 28 February 2018, the investment management fee was based on a rate of 0.65% of the first £50 million of the Company’s assets, reducing to 0.50% above this level. The fee rate was applied to an asset amount calculated as total assets (excluding current year income) less the current liabilities of the Company (the “Fee Asset Amount”).

The fee was calculated at the rate of one quarter of 0.65% of the Fee Asset Amount up to the initial threshold of £50 million, and one quarter of the fee rate of 0.50% multiplied by the Fee Asset Amount in excess thereof at the end of each quarter. The investment management fee was allocated 75% to the capital column and 25% to the revenue column of the income statement.

A performance fee was calculated at the rate of 10% of the annualised excess performance over the benchmark for the two years preceding the current financial year end, applied to the Average Assets of the Company. Average Assets were defined as the Fee Asset Amount at the start of the year and at the year end date added together and divided by two. The fee was payable annually in April and was capped at 0.25% of Average Assets.

The annualised excess performance against the Company’s benchmark for the two years ended 28 February 2018 was 9.0% (28 February 2017: 7.0%). The fee was restricted by the 0.25% cap and £1,794,000 was accrued for the year ended 28 February 2018.

Performance fees were wholly allocated to the capital column of the income statement as the performance was predominantly generated through capital returns of the investment portfolio.

With effect from 1 March 2018, the Company has no longer been charged a performance fee and, from the same date, the investment management fee has been based on a rate of 0.6% of the first £750 million of the Fee Asset Amount, reducing to 0.5% above this level. The fee is calculated at the rate of one quarter of 0.6% of the Fee Asset Amount up to the initial threshold of £750 million, and one quarter of 0.5% of the Fee Asset Amount in excess thereof, at the end of each quarter. The investment management fee is allocated 75% to the capital column and 25% to the revenue column of the Income Statement.

The Company’s ongoing charges - calculated as a percentage of average shareholders’ funds and using operating expenses, including performance fees2, and excluding finance costs, transaction charges and taxation were:

N/A

1.0%

=========

=========

1 Fees for non audit services relate to the debenture compliance work carried out by the Auditors and a review by the Auditors in respect of the impact of the new management fee arrangements (as set out in note 4).2 With effect from 1 March 2018, a performance fee is no longer charged. At 28 February 2018, a performance fee was charged. Please see note 4 for further details of the change.

6. DIVIDENDS

Dividends paid on equity shares:

Record date

Payment date

2019
£’000

2018
£’000

2017 Final of 13.00p

19 May 2017

19 June 2017

–

6,224

2018 Interim of 10.00p

10 November 2017

15 December 2017

–

4,788

2018 Final of 16.00p

18 May 2018

15 June 2018

7,661

–

2019 Interim of 12.00p

9 November 2018

26 November 2018

5,746

–

----------------

----------------

13,407

11,012

=========

=========

The Directors have proposed a final dividend of 19.20p per share in respect of the year ended 28 February 2019. The proposed dividend will be paid, subject to shareholders’ approval on 12 June 2019, to shareholders on the Company’s register on 17 May 2019. The proposed final dividend has not been included as a liability in these financial statements, as final dividends are only recognised in the financial statements when they have been approved by shareholders.

The total dividends payable in respect of the year which form the basis of determining retained income for the purposes of section 1158 of the Corporation Tax Act 2010 and section 833 of the Companies Act 2006, and the amount proposed for the year ended 28 February 2019 meet the relevant requirements as set out in this legislation.

Dividends paid or proposed on equity shares:

2019
£’000

2018
£’000

Interim dividend paid 12.00p (2018: 10.00p)

5,746

4,788

Final dividend proposed of 19.20p per share* (2018: 16.00p)

9,193

7,661

----------------

----------------

14,939

12,449

=========

=========

* Based upon 47,879,792 ordinary shares (excluding treasury shares) in issue on 2 May 2019.

All dividends paid or payable are distributed from the Company’s distributable reserves.

7. RETURNS/(LOSSES) AND NET ASSET VALUE PER ORDINARY SHARE
Revenue and capital earnings/(loss) per share are shown below and have been calculated using the following:

Year ended
28 February 2019

Year ended
28 February 2018

Revenue return attributable to ordinary shareholders (£’000)

16,123

14,029

----------------

----------------

Capital (loss)/return attributable to ordinary shareholders (£’000)

(50,069)

121,352

----------------

----------------

Total (loss)/profit attributable to ordinary shareholders (£’000)

(33,946)

135,381

----------------

----------------

Equity shareholders’ funds (£’000)

674,089

721,442

----------------

----------------

The weighted average number of ordinary shares in issue during each year on which the return per ordinary share was calculated was:

47,879,792

47,879,792

----------------

----------------

The actual number of ordinary shares in issue at the end of each year on which the undiluted net asset value was calculated was:

The fair value of the 7.75% debenture stock using the last available quoted offer price from the London Stock Exchange as at 28 February 2019 was 125p per debenture (2018: 127p), a total of £18,750,000 (2018: £19,050,000). The fair value of the 2.74% loan note has been determined based on a comparative yield for UK Gilts for similar duration maturity and spreads, and as at 28 February 2019 equated to a valuation of 97.78p per note (2018: 95.38p), a total of £24,445,000 (2018: £23,845,000).

The £15 million debenture stock was issued on 8 July 1997. Interest on the stock is payable in equal half yearly instalments on 31 July and 31 January in each year. The stock is secured by a first floating charge over the whole of the assets of the Company and is redeemable at par on 31 July 2022.

The £25 million loan note was issued on 24 May 2017. Interest on the note is payable in equal half yearly instalments on 24 May and 24 November in each year. The loan note is unsecured and is redeemable at par on 24 May 2037.

The Company has in place a £35 million three year multi-currency revolving loan facility with Scotiabank (Ireland) Limited. As at 28 February 2019, £2.5 million of the facility had been utilised (2018: £35 million). Under the amended agreement the termination date of this facility is the third anniversary of the effective date being May 2021. Interest on this facility is reset every three months and is currently charged at the rate of 1.68% (2018: 1.47%).

The Company also has available an uncommitted overdraft facility of £10 million with BNYM, of which £nil had been utilised at 28 February 2019 (2018: £nil).

11. CALLED UP SHARE CAPITAL

Ordinary
shares
in issue
number

Treasury
shares
number

Total shares
number

Nominal
value
£’000

Allotted, called up and fully paid share capital comprised:

Ordinary shares of 25p each:

At 28 February 2018

47,879,792

2,113,731

49,993,523

12,498

----------------

----------------

----------------

----------------

At 28 February 2019

47,879,792

2,113,731

49,993,523

12,498

=========

=========

=========

=========

During the year no ordinary shares were purchased for cancellation or placed in or cancelled out of treasury (2018: nil).

The ordinary shares (excluding any shares held in treasury) carry the right to receive any dividends and have one voting right per ordinary share. There are no restrictions on the voting rights of the ordinary shares or on the transfer of ordinary shares.

12. VALUATION OF FINANCIAL INSTRUMENTS
Financial assets and financial liabilities are either carried in the Balance Sheet at their fair value (investments) or at an amount which is a reasonable approximation of fair value (due from brokers, dividends and interest receivable, due to brokers, accruals, cash at bank and bank overdrafts). Section 11 of FRS 102 requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of inputs used in making the measurements. The valuation techniques used by the Company are explained in the accounting policies note 2 of the Financial Statements contained in the 2019 Annual Report.

Categorisation within the hierarchy has been determined on the basis of the lowest level input that is significant to the fair value measurement of the relevant asset.

The fair value hierarchy has the following levels:

Level 1 – Quoted market price for identical instruments in active markets
A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The Company does not adjust the quoted price for these instruments.

Level 2 – Valuation techniques using observable inputs
This category includes instruments valued using quoted prices for similar instruments in markets that are considered less active; or other valuation techniques where significant inputs are directly or indirectly observable from market data.

Level 3 – Valuation techniques using significant unobservable inputs
This category includes all instruments where the valuation technique includes inputs not based on observable data and these inputs could have a significant impact on the instrument’s valuation.

This category also includes instruments that are valued based on quoted prices for similar instruments where significant entity determined adjustments or assumptions are required to reflect differences between the instruments and instruments for which there is no active market. The Investment Manager considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

Financial assets at fair value through profit or loss as at 28 February 2019

Level 1
£’000

Level 2
£’000

Level 3
£’000

Total
£’000

Equity investments

707,150

–

–

707,150

----------------

----------------

----------------

----------------

Total

707,150

–

–

707,150

=========

=========

=========

=========

Financial assets at fair value through profit or loss as at 28 February 2018

Level 1
£'000

Level 2
£'000

Level 3
£'000

Total
£'000

Equity investments

792,060

–

–

792,060

----------------

----------------

----------------

----------------

Total

792,060

–

–

792,060

=========

=========

=========

=========

There were no transfers between levels for financial assets during the year recorded at fair value as at 28 February 2019 and 28 February 2018. The Company did not hold any level 3 securities throughout the financial year or as at 28 February 2019 (2018: nil).

13. TRANSACTIONS WITH THE MANAGER AND THE INVESTMENT MANAGER
The Manager was appointed as the Company’s Alternative Investment Fund Manager (AIFM) with effect from 2 July 2014. The Manager has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to the Investment Manager. Details of the fees payable to the Manager are set out in note 4.

The Manager provides management and administration services to the Company under a contract which is terminable on six months’ notice. BFM has (with the Company’s consent) delegated certain portfolio and risk management services, and other ancillary services, to BIM (UK). Further details of the investment management contract are disclosed in the Directors’ Report.

The investment management fee payable for the year ended 28 February 2019 amounted to £4,590,000 (2018: £3,884,000). As set out in note 4, with effect from 1 March 2018 the Company no longer has any performance fee arrangements in place. The performance fees accrued for the year ended 28 February 2018 totalled £1,794,000. At the period end, £2,099,000 was outstanding in respect of the management fee (2018: £1,965,000). There were no amounts outstanding in respect of the performance fee at the period end as this ceased to apply from 1 March 2018. As at 28 February 2018 £1,794,000 was outstanding in respect of the performance fee.

In addition to the above services, BlackRock provided the Company with marketing services. The total fees paid or payable for these services for the year ended 28 February 2019 amounted to £113,000 including VAT (2018: £155,000). Marketing fees of £152,000 (2018: £189,000) were outstanding at year end.

14. RELATED PARTIES DISCLOSURES AND TRANSACTIONS WITH DIRECTORS
Disclosures of the Directors’ interests in the ordinary shares of the Company and fees and expenses payable to the Directors are set out in the Directors’ Remuneration Report. At 28 February 2019, an amount of £13,000 (2018: £13,000) was outstanding in respect of Directors’ fees.

15. CONTINGENT LIABILITIES
There were no contingent liabilities at 28 February 2019 (2018: nil).

16. PUBLICATION OF NON-STATUTORY ACCOUNTS

The financial information contained in this announcement does not constitute statutory accounts as defined in section 435 of the Companies Act 2006.

The figures set out above have been reported upon by the auditors. The comparative figures are extracts from the audited financial statements of BlackRock Smaller Companies Trust plc for the year ended 28 February 2018, which have been filed with the Registrar of Companies. The report of the auditors for the years ended 28 February 2018 and 28 February 2019 contain no qualification or statement under section 498(2) or (3) of the Companies Act 2006. The 2018 Annual Report and Financial Statements will be filed with the Registrar of Companies after the Annual General Meeting.

17. ANNUAL REPORT AND FINANCIAL STATEMENTS

Copies of the Annual Report and Financial Statements will be sent to members shortly and will be available from The Company Secretary, BlackRock Smaller Companies Trust plc, 12 Throgmorton Avenue, London EC2N 2DL.

18. ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at 12 Throgmorton Avenue, London EC2N 2DL on 4 June 2019 at 2:00 p.m.

The Annual Report and Financial Statements will also be available on the BlackRock Investment Management website at http://www.blackrock.co.uk/brsc. Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.

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